The Federal Trade Commission recently provided its annual letter to the CFPB concerning its enforcement activities relating to compliance with Regulation Z (Truth in Lending Act), Regulation M (Consumer Leasing Act), and Regulation E (Electronic Fund Transfer Act).  Under Dodd-Frank, the FTC retained its authority to enforce these regulations with respect to entities subject to its jurisdiction.  The FTC and CFPB coordinate their enforcement and related activities pursuant to a MOU entered into in 2012, reauthorized in 2015, and extended in 2018.  The new letter, which covers the FTC’s activities in 2018, responds to the CFPB’s request for information and focuses on three areas: enforcement actions; research and policy work; and consumer and business education.

Regulation Z/TILA; Regulation M/Consumer Leasing Act.  The FTC’s TILA and CLA enforcement activities included:

• With respect to auto credit and leasing: (1) initiating an action in federal district court involving the alleged failure of four auto dealers to disclose required credit and leasing terms in social media advertisements, and (2) mailing checks as redress to consumers following the settlement of a federal court action against nine dealerships and owners who had allegedly used advertisements that made misleading claims about the availability of vehicles at the advertised prices and financing terms.  The dealerships and owners were alleged to have violated TILA and Regulation Z by not clearly disclosing required credit information in advertisements.
• With respect to payday lending: (1) the affirmance by the Ninth Circuit of a “record-setting” $1.3 billion dollar district court judgment and order against an individual and several corporate defendants for alleged TILA and FTC Act violations in connection with payday loans, and (2) mailing checks to consumers following the settlement of charges against two individuals and their companies who had allegedly made unauthorized loans to consumers and provided incorrect disclosures in connection with such loans.
• With respect to consumer electronics financing, the FTC continued litigation against a consumer electronics retailer for violating a consent order that settled allegations that the retailer had violated TILA by failing to provide written disclosures and account statements to consumers.

The FTC reported that its TILA and CLA research and policy efforts included (1) conducting a study of consumers’ experiences related to buying and financing automobiles at dealerships, (2) working on military consumer protection issues through its Military Task Force, (3) hosting a symposium on the economics of consumer protection, and (4) issuing blog posts providing information to consumers and businesses.

Regulation E/EFTA. The FTC’s Regulation E enforcement actions included seven new or ongoing cases.  Six cases involved negative options and the payment terms that automatically applied absent cancellation for which the companies involved allegedly had not obtained proper written authorization under Regulation E or provided copies of written authorizations to consumers.  One case involved allegations that a consumer electronics retailer had conditioned the extension of credit on mandatory preauthorized transfers in violation of the EFTA and Regulation E.

With respect to EFTA research and policy work, the FTC worked with a Department of Defense interagency group and the ABA on electronic fund transfer issues, including issues relating to preauthorized electronic fund transfers in the military lending rule.